F4​​-​​Corporate​​

Fraudulent​​
and​​
Criminal
Behaviour
Corporate​​Fraudulent​​
and​​
Criminal​​
Behaviour

BRIBERY:

UK​​Bribery​​Act​​2010​​
-​​
key​​regulatory​​
document.

Section 7: Failure of commercial organisations to prevent bribery. Offence is committed irrespective of whether
the​​acts​​or​​omissions​​which​​form​​part​​
of​​
the​​offence​​take​​place​​in​​the​​UK​​or​​elsewhere.

Section 9 requires the Secretary of State to publish guidance containing procedures which commercial
organisations​​can​​put​​
in​​place​​
to​​prevent​​bribery

Maximum​​sentence​​
for​​
individual:​​​
7-10​​years​​of​​imprisonment.
Maximum​​sentence​​
for​​
corporate​​body:​​ unlimited​​fine.
Note:​​Companies​​operating​​
in​​
both​​jurisdictions​​must​​comply​​with​​both​​acts.

Companies​​Act​​s.993​​ (1):
If any business of a company is carried on with intent to defraud creditors of the company or creditors of any
other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the
business​​in​​that​​manner​​
commits​​an​​offence.

Fraud​​Act​​s.9​​(2):

This​​section​​applies​​
to​​a​​
business​​
which​​
is​​carried​​on:

a) By​​a​​person​​who​​
is​​outside​​the​​
reach​​of​​section​​993​​Companies​​Act​​(offence​​of​​fraudulent​​trading);
b) With​​intent​​to​​defraud​​creditors​​
of​​
any​​person​​or​​for​​any​​other​​fraudulent​​purpose.

FRAUDULENT​​
AND​​
WRONGFUL​​
TRADING:

Fraudulent trading - carrying on a business with the intention of defrauding creditors or for any fraudulent
purposes. The definition applies to company which is trading, has ceased trading or is in the process of being
wound​​up.

Wrongful​​trading​​according​​to​​
Insolvency​​Act​​1986​​s.214:

a) The​​company​​has​​gone​​
into​​insolvent​​
liquidation;
b) At some time before the commencement of winding up of the company, that person knew or ought to have
concluded that there was no reasonable prospect that the company would avoid going into insolvent
liquidation;
c) That​​person​​was​​a​​director​​
of​​
the​​company​​at​​that​​time.

Wrongful trading refers to companies that continued to carry on their daily business trading insolvent, that is,
unable​​to​​pay​​their​​debts​​
as​​they​​fall​​due.

Court will take into account in deciding whether or not the director knew or ought to know that the
company​​is​​insolvent:

- The general knowledge, skill and experience that may reasonably be expected of a person carrying out the
same​​functions​​as​​
are​​carried​​
out​​by​​
that​​director​​in​​relation​​to​​the​​company;
- The​​general​​knowledge,​​
skill​​and​​
experience​​that​​that​​director​​has.
Company Directors Disqualification Act 1986 identifies three ​categories of conduct which may lead to
disqualification​​of​​a​​
person​​from​​
management​​of​​companies:

1) General​​misconduct​​
with​​
companies:

a) Indictable offence in connection with promotion, formation, management or liquidation of an company or

with​​the​​receivership​​or​​management​​of​​
a​​company’s​​property​​per​​section​​2.
Disqualification​​
period:​​​
Summary​​conviction​​-​​maximum​​5​​years.​​Indictment​​-​​maximum​​15​​years.

b) Persistent breaches of companies legislation in relation to provisions which require any return, account or
other document to be filed with, or notice of any matter to be given to, the Registrar of Companies. S.3
persistently​​in​​
default​​that​​
in​​five​​years​​person​​adjudged​​guilty​​on​​three​​or​​more​​defaults.
Disqualification​​
period:​​
Maximum​​-​​5​​years.

c) Fraud in winding up if person guilty of offence under 993 of Companies Act 2006 or otherwise found guilty
by​​officer​​or​​liquidator.
Disqualification​​
period:​​​
Maximum​​-​​15​​years.

2) Insolvent​​companies​​and​​disqualification​​for​​unfitness:

a) Disqualification of directors of companies which have become insolvent, who are found by the court to be
unfit​​to​​be​​directors.
Disqualification​​
period:​​​
Minimum​​-​​2​​
years.​​Maximum​​-​​15​​years.

b) Disqualification​​
after​​investigation​​of​​
ac​​company​​under​​Companies​​Act​​1985.
Disqualification​​
period:​​​
Maximum​​-​​15​​years.

3) Other​​cases​​for​​disqualification:

a) Participation​​in​​fraudulent​​or​​
wrongful​​
trading​​under​​s.213​​or​​s.214​​Insolvency​​Act​​1986;
b) Undischarged​​
bankrupts​​acting​​
as​​directors​​per​​s.11​​of​​the​​Company​​Directors​​Disqualification​​Act​​
1986;
c) Failure to pay under a county court administration order per s.11 of the Company Directors Disqualification
Act​​1986.

Anyone​​who​​acts​​in​​
contravention​​of​​
a​​
disqualification​​order​​is​​liable:

- To​​imprisonment​​
for​​
up​​
to​​
two​​
years​​and/or​​a​​fine,​​on​​conviction​​or​​indictment;
- To imprisonment for up to six months and/or a fine not exceeding the statutory maximum, a summary
conviction.